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Status: You are viewing the version of the handbook as on 2005-06-30.

MCOB 3.11 Communication and approval of qualifying credit promotions for an overseas person or an unauthorised person

Approval of qualifying credit promotions

MCOB 3.11.1G
  1. (1)

    Section 21(1) of the Act (Restrictions on financial promotion) prohibits an unauthorised person from communicating a financial promotion (qualifying credit promotion in the case of MCOB), in the course of business, unless an exemption applies or the qualifying credit promotion is approved by a firm.

  2. (2)

    Most of the rules in this chapter apply when a firm approves a qualifying credit promotion in the same way as when a firm communicates a qualifying credit promotion itself. A firm therefore has a similar responsibility for a qualifying credit promotion that it approves as for one that it communicates. For example, a firm which approves a non-real time qualifying credit promotion must:

    1. (a)

      if MCOB 3.9.1 R applies, confirm that the qualifying credit promotion complies with the rules in this chapter; and

    2. (b)

      if MCOB 3.6.3 R(1) applies, be able to show that it has taken reasonable steps to ensure that the qualifying credit promotion is clear, fair and not misleading.

  3. (3)

    A firm may also wish to approve a qualifying credit promotion that it communicates itself. This would ensure that an unauthorised person who then also communicates the qualifying credit promotion to another person will not contravene the restriction in section 21(1) of the Act (Restrictions on financial promotion).

  4. (4)

    A firm which approves a promotion that is exempt under MCOB 3.2.5 R (Application: what?; exemptions) or MCOB 3.3.1 R (Application: where?) must still comply with certain rules in this chapter (see MCOB 3.2.4 R (Application: what? exemptions) and MCOB 3.3.3 R (Exceptions to territorial scope: rules without territorial limitation)).

No approval of real time qualifying credit promotions

MCOB 3.11.2R

A firm must not approve a real time qualifying credit promotion.

Approval of qualifying credit promotions when not all the rules apply

MCOB 3.11.3R

If a firm approves a qualifying credit promotion in circumstances in which one or more of the rules in this chapter are expressly disapplied, the approval must be given on terms that it is limited to those circumstances.

MCOB 3.11.4G

If an approval is limited in accordance with MCOB 3.11.3 R, and an unauthorised personcommunicates the qualifying credit promotion to persons not covered by the approval, the unauthorised person may commit an offence under section 21(1) of the Act (Restrictions on financial promotion). A firm giving a limited approval may wish to advise the unauthorised person accordingly.

Non-real time qualifying credit promotions for overseas persons

MCOB 3.11.5R

A firm must not communicate or approve a non-real time qualifying credit promotion which relates to qualifying credit provided by an overseas person, unless:

  1. (1)

    the qualifying credit promotion makes clear which firm has approved or communicated it and, where relevant, explains;

    1. (a)

      that the rules made under the Act for the protection of customers do not apply;

    2. (b)

      the extent and level to which the compensation scheme will be available, or if the scheme will not be available, a statement to that effect; and

    3. (c)

      if the communicator wishes, the protection or compensation available under another system of regulation; and

  2. (2)

    the firm has no reason to doubt that the overseas person will deal with customers in the United Kingdom in an honest and reliable way.